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How a little-known copyright ruling will and won't impact music streaming

The Copyright Royalty Board ruled last week to force music streaming service Pandora pay more in royalties to play certain music. Here's what that means for streaming.
- photo by Chandra Johnson

A new court ruling last week may signal a small but significant change in music streaming.

The Copyright Royalty Board ruled that music streaming service Pandora needs to pay more in royalties for every 100 plays hiking the rate from 14 cents to 17 cents, the Washington Post reported.

The digital advocates requesting the increase wanted Pandora to pay 25 cents for every 100 plays.

But the ruling doesn't apply to other high-profile streaming services like Spotify because they use different artist negotiation techniques and their business model allows users to choose their own songs. Pandora, by contrast, uses an algorithm to tailor song choices based on user taste and ratings.

The case underscores an ongoing problem in the battle between the music industry and the often-free streaming services: How to make streaming profitable without ripping off artists?

Pandora has famously never turned a profit since going public in 2011, and like other streaming services, has struggled to attract users to its paid subscription service rather than its free option. The public's clear preference for free music over a subscription has compelled some high-profile artists like Adele and Taylor Swift to pull their music from the services unless they change their tactics on paying royalties which Apple did earlier this year.

While the ruling specifically impacts Pandora, the radio-like service will likely face the same issues other streaming services do as the industry evolves: Find a way to get people to pay for music they now enjoy for free, or risk being shut out by many artists.